This invention relates to an extended coverage monetary regulation system.
Both manual and automatically operated devices have been known in the art for quite some time that are utilized for the protection and regulation of monetary exchanges. The banking crisis of the 1930's, for instance, led to the creation of the Federal Deposit Insurance Corporation (F.D.I.C.) and the Federal Savings and Loan Insurance Corporation (F.S.L.I.C.) to protect depositors in banks and savings and loan institutions from loss in the event an institution failed. Presently, each qualifying institution pays premiums to the federal insuring entity to provide the insurance for their depositors. The level of insurance for each depositor has grown steadily over the years to the present level of $100,000 each.
Individual depositors, with exceptionally large amounts to deposit, have required financial institutions to provide details of the specific insurance protection offered by the applicable federal insurance entity in order to find ways to insure more than $100,000 at their chosen institution. The regulations defining insurance coverage provide for separate coverage for individual depositors, joint depositors, and funds held in trust. As a result, by carefully structuring the titles and ownership records of depositors' accounts, financial institutions in the past have been able to provide some additional insurance protection beyond the $100,000 limit in order to satisfy the needs of most of its depositors.
Nonetheless, commercial business depositors frequently have deposit balances in excess of the insured limits and must identify an institution that is "safe" (financially secure) by careful monitoring of public information provided by their institution or by spreading their deposits into multiple insured institutions to keep the level of their deposits below insured limits. Frequently, businesses have chosen to bank with large financial institutions because they seem to be the strongest and it is an accounting burden to distribute deposits in increments of $100,000 or less.
Public deposits of federal, state, or municipal entities must be federally insured or "collateralized" by having financial institutions pledge investment securities (normally U.S. Treasury, U.S. Agency, or municipal bonds) to secure public deposits in the event of institution failure. The $100,000 insurance limit is frequently substantially below the deposit levels of public entities.
Since the mid 1980's, economic conditions have put substantial pressures on financial institutions involved in lending to (1) lesser developed countries, (2) agricultural interests, (3) energy concerns, and (4) real estate developers. They have all suffered losses that put pressure on their financial base. The rate of financial institution failure has escalated rapidly. The problem of bank and S & L failures has been especially prominent in the Southwestern United States.
As the general public has became more aware of the weakened condition of many financial institutions, depositors began to withdraw deposits in excess of insured limits and redeposit them with other separately insured institutions. The loss of funding by the affected institutions placed even more pressure on their ability to survive. New programs were needed to provide the funding necessary to continue to operate. The prior art includes several types of programs that were developed and installed by numerous financial institutions, such as: